I think it largely depends on what you're used to.

A gamepad just feels more natural to me, and so that is what I use. But it can indeed be difficult to find targets when things get crowded. And so every once in a while I do grab the mouse and click on the target I want. It also helps if you get used to the gamepad shortcuts for changing targeting modes between All-Friendly-Party-Enemy.

But in the end I think what is "better" depends solely on your own preference. ^^